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Sunday, November 15, 2020

Sample Business Plan: Setup of Supermarket in Nigeria

This is a sample business plan for the setup of a medium scale supermarket in Nigeria. A supermarket is a large retail mart that stocks a wide range of consumables although in Nigeria people often times mix up the term with grocery store or convenience shop. Simply put, a supermarket is a self-service shop wherein people can move about with a shopping basket to order for whatever product they wish to buy and pay for them at a counter where a cashier receives the items, scans them then presents the customer with a receipt for payments.

In Nigeria, there are very few standard supermarkets – the ones that have well stocked and organised product segments that can guarantee customers a one stop shopping experience. Notable supermarket brands in Nigeria include; Ebeano Supermarket, Next, Grand Square, Shoprite, W2 Supermarket, Park ‘N’ Shop, 411 Supermarket, Sahad Stores to name a few.

The Business Opportunity for Supermarkets in Nigeria

Nigeria is largely a consumer economy with large middle class population - roughly between 23 and 38 million people – with strong western influences and is inclined to purchase lifestyle products and consumables. Most of its middle class are young families with reasonably educated parents and who fall within an income bracket that can purchase range of products such as; detergents, groceries, skincare products, healthcare products, processed foods, toiletries, electronics, stationery to name a few. The average middle class family spends at least 60,000 naira monthly on consumables for a family of 6 and this market segment accounts for at least 2.3 trillion naira per annum in retail sales. That means this market segment is still underserved in as much as it should even with over 2 billion dollars invested in this industry since 2010.

Supermarkets should not be confused with Convenience shops even though they sell similar products as supermarkets- they aren’t always self-service and very often don’t offer one stop shopping option to customers. You would typically also find them in neighbourhoods and residential areas.

Challenges of Owning and Running A Supermarket in Nigeria

The major challenges come from declining purchasing power of potential customers since 2015 and rising cost of doing business in the country. Many Nigerian businesses operate within a hostile business environment with power cuts very common. Price of fueling and maintaining generating sets is astronomical. Then there are occasional threats from armed robbers and looters as was the case with #endsars protests and reprisal attacks against South African xenophobic attacks – but this are rare. There is also the challenge of theft from staff. Also finding a very good location for this business is a big challenge as it usually isn’t easy tom come by and even when it is often comes at a high price.

Where are good places to site a Supermarket Business?

Ideal locations are busy and conspicuous places with good parking space in middle class locations in any of the major consumer market cities in Nigeria. For instance big cities like Ibadan, Lagos, Kano, Kaduna, Port Harcourt, Benin, Abuja and Warri. Owning the building is a long term advantage however renting our spacious shopping space is still a viable alternative.

Start-up Requirements

The following breakdown is a sample estimate and it is conservative.

  • Stock – N 20,000,000
  • Cash at hand – N 15,000,000
  • Furniture Expenses – N 1,500,000
  • Generator set – N 5,000,000
  • 2 years Rent – N 18,600,000
  • Others – N 12,000,000
  • Total – N 72,100,000

First Year Sales Projection

Assuming the supermarket is able to achieve daily sales of 6 million and is open everyday of the week with assumed gross profit margin on sales of 14.3%, a first year sales projection could look like this;

Item

Estimate

Gross Sales

Gross Profit

Operating Expenses

Profit before tax

Taxation

Profit after tax

ROI

Payback Period

180,000,000

25,800,000

12,600,000

13,200,000

3,960,000

9,240,000

12.5%

7 to 8 years

 

Other Related Sample Business Plan

Paul Onwueme is a professional Business Plan writer since February 2014, has achieved respectable results with his business plan writing service with several of his clients securing funding and leaving positive feedback about his writing service. You can connect with him via phone: 0803 206 4106 or email: paulonwueme@gmail.com


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